London’s FTSE 100 reached its lowest point in nearly a week on Wednesday as oil prices surged above $100 a barrel, reigniting concerns over inflation and curbing risk appetite, amidst a week filled with eagerly awaited economic data reports.
The blue-chip FTSE 100 index fell 0.42% to 10,766.61 points by 0925, while the midcap FTSE 250 slipped 0.29%.
- Benchmark Brent crude oil futures rose past $100 a barrel, breaching the symbolic barrier for the first time since July 24 as both the U.S. and Iran struck vessels, escalating the ongoing conflict.
- Oil majors in the UK advanced, with BP rising 1.5% and Shell increasing by 1%, as energy stocks reached a more than four-month high.
- Heavyweight banks were the biggest drag, with HSBC down 1.2%, Barclays off 1.6%, and Lloyd Banking sliding 1.3%.
- “Brent crude pushing above $100 a barrel has had a psychological effect on the market, pushing a hypothetical inflation worry gauge to ‘serious’ status and dragging down financial assets,” said Dan Coatsworth.
- Investors are closely monitoring a significant U.S. inflation report and economic growth data from the UK this week, which may impact interest rate expectations from central banks.
- Markets are assigning a 60% probability to the U.S. Federal Reserve implementing a rate hike next week, while there is a broad consensus that the Bank of England will maintain its current rates, according to LSEG data.
- Among stocks, Burberry slipped 2.4% after HSBC downgraded the stock to “hold” from “buy”. It weighed down the personal goods sector.
- Asset manager Aberdeen rose 2.2% after naming Torbjörn Magnusson, the former chief executive of Nordic insurance giant Sampo, as its chair-designate and non-executive director.
- Among the midcaps, polymer maker Victrex topped the index with a 14.7% rise after raising its annual underlying profit before tax forecast.
- Eastern Mediterranean-focused gas producer Energean opens new tab rose 3.9% after posting a 45% jump in first-half profit.
